Losses on Wall Street as recession fears return

LAST UPDATE 19:35

All three US market indexes are now in negative territory, as sentiment was weighed down by the contraction PMI showed in July, with technology losing momentum following disappointing Snap results.

In particular, the industrial index Dow Jones recedes against 0.3% and moves on 31,930 unitsthe enlarged S&P 500 makes losses 0.9% at 4,012 unitswhile the greatest pressures are exerted on the technologically weighted one Nasdaq which recedes against 1.8% at 11,840 units.

Tech is taking a step back today after back-to-back rallies over the past few days, as negative results from Snap and Twitter weigh on the sector.

In particular, Snap posted an adjusted net loss of 2 cents per share, double what the market expected, while its revenue came in at $1.11 billion against expectations for $1.4 billion and sees its stock tumble by almost 40%.

Meanwhile, Twitter saw its revenue fall 1% in the quarter from a year ago, posting its first annual decline since the middle of the pandemic in 2020, but its stock fell slightly by 0.8%.

However, Twitter added 8.8 million new users during the quarter, as predicted by the market, while it pointed to “uncertainty related to its impending acquisition” by Elon Musk for the decrease in its revenue.

In any case the indices are on course to close out a strong week, with the Nasdaq up +5.3% before the session started, the Dow Jones up +2.4% and the S&P 500 up +3.5%.

The investment climate generally appears strengthened recently, boosted by corporate results that exceed – albeit low – expectations.

Notably, with nearly 21% of S&P 500 companies reporting earnings, 70% have beaten market estimates, according to FactSet.

Sentiment today, however, appeared to be heavily weighed on the release of preliminary PMI data, which showed that US business activity contracted in July for the first time since 2020.

In particular, S&P Global’s preliminary composite PMI fell 4.8 points to 47.5, the lowest level seen since May 2020 amid the pandemic.

Characteristically, excluding the first months of the pandemic with strict lockdowns, the reading was the lowest since the 2009 global financial crisis.

“The preliminary PMI data for July shows a worrying deterioration in the economy,” said S&P Global Market Intelligence Chief Economist Chris Williamson.

“Manufacturing has frozen and the service sector’s recovery from the pandemic has been reversed as demand is weighed down by rising living costs, higher interest rates and a negative economic outlook,” he added.

It is noted that similar trends were shown earlier today by the Eurozone PMI, which fell to a 17-month low in July.